Bitcoin Aims for Yearly Highs After Breaking These New Records

Bitcoin broke a new record today as the price of BTC recorded 64 consecutive days above $10,000. The last time this happened was during the 2017 bull run, during which prices doubled in two weeks.

New ATH record guys!

62 days of #Bitcoin ending above $10,000.

Previous was 61 from 1st Dec 2017.

— Danny Scott (@CoinCornerDanny) September 27, 2020

The three-month daily realized volatility of the alpha cryptocurrency has also subsided considerably below the average of 4% to 2.6%, at press time. These are positive characteristics of Bitcoin’s value proposition as a replacement for gold and an inflation hedge.

Bitcoin Price Analysis

Trend analysis of the daily chart shows BTC price is looking to break above the symmetrical triangle with a target around 2019 yearly highs of $13,800.

Yesterday’s positive breakout above the symmetrical triangle was short-lived, however. BTC price subsided below the resistance from the triangle due to a lack of volume. 

A consolidation above $11,083 would make the upward path clearer.

BTC/USD Daily Price Chart on Bitstamp Source: TradingView

On a weekly scale, BTC is approaching the resistance at $11,600 from the parallel range between support and resistance at $5,000 and $11,600, respectively. 

If Bitcoin breaks above the $11,600 resistance, it may continue back to all-time highs of $19,666 on Bitstamp.

BTC/USD Weekly Price Chart on Bitstamp Source: TradingView

Another reversal indicator, the Tom Demark (TD) sequential count, is also turning bullish after a 1-4 negative correction in the past four weeks, which is positive. 

The TD sequential count is spread from one to thirteen. It predicts a reversal at the 9th or 13th count and suggests continuity of the previous trend (which was bullish in this case) after a 1-4 correction. 

Bitcoin Miners Log New High in Hashrate

On Sept. 20, the difficulty for mining Bitcoin reached a new all-time high, increasing by 8.7%. The rise in Bitcoin mining difficulty requires more computational power for validating a BTC block, reducing the profitability for each miner.

Nevertheless, the growth of the mining industry seems unaffected by the rising difficulty. It recorded a new all-time high just four days later.

Bitcoin Mining Total Hashrate Source: Glassnode

The difficulty ribbon indicator, which plots the moving averages of the mining difficulty, is one of the most reliable indicators of miner sentiments. Moving averages are spread over periods between 9 days to 200 days.

An expanding band of these moving averages towards the upside signals miner growth. Whereas, a drop in the moving averages of difficulty is indicative of a downtrend in Bitcoin prices.

Historically, the compression in these bands of moving averages (represented by vertical green bars) has acted as a reliable buying indicator. 

The compression is usually followed by an increase in the difficulty, which signals positive sentiments of the miners. Currently, BTC is confirming a breakout from the recent compression due to the reduction in rewards after halving in May. 

Bitcoin Price and Difficulty Ribbon Compression Source: Twitter

Leading on-chain analyst, Willy Woo, tweeted: 

“Prepare for a great Q4 2020 for BTC folks (blah blah, decoupling, blah blah, new correlations). The difficulty ribbon is one of my more reliable personal favorites.”

Market Sentiments 

On the derivatives front, sentiment is slowly reversing from its bearish stand as price makes a break towards $11,000. A daily funding rate of 0.03% is the base interest rate for these contracts; rates below 0.03% represent larger unsettled contracts for shorts than longs.

Funding Rate for BTC Perpetual Swaps on BitMEX. Source: BitMEX

Moreover, rates above 0.15% represent heightened bullish sentiment from derivatives traders and are usually met with a short-term pullback. Currently, the derivative trader’s sentiment on BitMEX is neutral, positioning BTC for a move to either side.

The fear and greed index of Bitcoin is also in the neutral territory with a slight inclination towards fear, suggesting uncertainty in the market. 

Though data suggests Bitcoin is primed for another breakout, the close vicinity of the support and resistances, as mentioned above, predict considerable volatility in the short-term.